On Wednesday 22 November 2023, Chancellor of the Exchequer Jeremy Hunt delivered the UK’s Autumn Statement. Confronted with the pressures of the upcoming 2024 general election, this ‘mini-budget’ presents one of the Conservative government’s remaining opportunities to win over public favour.Polls remain stubbornly against Sunak’s government. Yesterday’s Autumn Statement changes tact with an economic policy ‘changing gear’, introducing the biggest tax cuts for businesses and individuals since 1988 while reviving a long-dormant mantra of ‘compassionate Conservatism’ (coinciding with last week’s return of former prime minister David Cameron to cabinet).While it struck with a more optimistic tone than last year’s address, the chancellor’s measures offer little to the tech sector due to the government’s continued reliance on funding R&D initiatives. Nevertheless, the Autumn Statement better serves the space sector and bolsters advanced manufacturing capabilities across devolved regions.

Macroeconomic forecast

The Office for Budget Responsibility has confirmed that the government is on track to achieve its three economic missions: halving inflation, growing the economy, and cutting national debt. Inflation has fallen from 11.1% when Sunak took office to 4.6%, which is lower than half of EU economies and on course to reach 2.8% at the end of 2024 and the target rate of 2% in 2025. While the economy has grown by 0.6% in 2023, the OBR’s growth forecast for 2024 has fallen from 1.8% to 0.7%. Finally, headline debt is now predicted to be 94% of GDP by the end of the forecast (down from 100%), and is expected to decrease every year compared to forecasts in Spring.

Tech Sector Measures

  • Emerging technologies and innovation: The UK government has committed GBP 500 million for AI compute infrastructure and GBP 145 million through Innovate UK for business innovation in productivity, decarbonisation, battery technology, Catapult investments, and critical technologies. Additionally, the government has outlined quantum missions for the next decade and will look to implement Professor Dame Angela McLean’s recommendations on pro-innovation regulation.
  • R&D funding: Several R&D initiatives have been funded to support scale-up programmes, investment in research, and scientific infrastructure.
  • Long-term Investment in Technology and Sciences (LIFTS): GBP 250 million has been committed to two successful bidders under the LIFTS initiative. This will create a new investment vehicle tailored to the needs of pension schemes, seeking over GBP 1 billion of investment to support UK science and technology businesses.
  • Space sector: A Space Clusters and Infrastructure Fund of up to GBP 59 million will support 15 projects, in collaboration with private sector funding, to raise a combined BGP 100 million investment in space research and development infrastructure. The government has further assigned GBP 47 million to improve the use of Earth Observation data for climate science.
  • Advanced manufacturing: Funding of GBP 4.5 billion will be available from 2025-26 to last for five years across the following manufacturing sub-sectors: automotive (particularly zero-emission vehicles, their batteries, and supply chains), aerospace, life sciences, and clean energy (carbon capture, utilisation and storage, electricity networks, hydrogen, nuclear, and offshore wind). This has been complemented by a significant lift to encourage advanced manufacturing across devolved regions and investment zones.
  • Telecommunications: 10 regions have been awarded funding to establish themselves as 5G Innovation Regions following a competition for the GBP 40 million adoption fund.
  • Digital transformation: Several government initiatives have been announced to digitalise the housing sector and work and pensions, as well as the introduction of digital assets and supporting SMEs.
  • Skills: GBP 50 million has been assigned to a two-year pilot to explore ways to stimulate training in growth sectors and address barriers to entry in high-value apprenticeships.
  • Foreign and direct investment: Pro-investment recommendations are to be implemented, including establishing a Ministerial Investment Group, reviewing investment grant processes, increasing resources for the Office for Investment, and strengthening the UK’s world-class concierge service for investors.
  • Corporate environmental responsibility: The Plastic Packaging Tax rate will increase from 1 April 2024 to GBP 217.85 per tonne. An evaluation plan will be published by the end of the year.
  • Regulators: New draft statutory guidance will update and strengthen the current Growth Duty guidance for regulators for consultation. The government is extending the Growth Duty to Ofcom, Ofwat, and Ofgem, with secondary legislation to be introduced in 2024.
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